Question

econ The presence of secondary markets ______________ the interest rates that firms have to pay on bonds issued by them.

Answer 1

decrease

Step-by-step explanation:

Secondary markets decrease the interest rates that organizations have to pay on issued bonds. With the presence of secondary markets, companies that issue bond can then pay lower rates of interest and still sell the entire bonds needed. What the secondary market does is that it bids up the bonds price above their face values. This therefore makes interest that will be paid a lower percentage, and thus leads to lower ROI and yield.